Note: The following explanatory memorandum should be read in conjunction with the explanatory memorandum(s) appended to the:
This memorandum is not part of the determination, but is intended to indicate its general effect.
This determination comes into force on 21 September 2014.
The Members of Parliament (Remuneration and Services) Act 2013 (the Act) gave the Remuneration Authority (the Authority) responsibility for setting accommodation services within New Zealand for members of Parliament, travel services within New Zealand for members’ family members, and travel services within New Zealand for former Prime Ministers and their spouses or partners.
This determination is the first made under the Act. Accommodation services within New Zealand for members, and travel services within New Zealand for their families, were formerly set by the Speaker and by the Minister Responsible for Ministerial Services; travel services within New Zealand for former Prime Ministers were formerly set by the Prime Minister of the day.
This determination reflects the fresh look taken at these services by the Authority. The Act requires the Authority, in making its determination, to have regard to a number of factors, including fairness to the taxpayer and independence of approach.
Starting points for Authority
The starting points for the Authority in making this determination were that—
members and Ministers should not personally have to meet the expenses, such as accommodation, that they require to enable them to do their job:
any personal benefit to members should be kept to a minimum.
Members and Ministers are generally recognised as having 2 places of work: Wellington, where they attend Parliament and, in the case of Ministers, Cabinet, and their home base, where they attend to a wide range of matters affecting constituents. They are obliged by the nature of their duties to have 2 places of residence if their home base is outside Wellington. It is appropriate that the costs of their accommodation in Wellington, if they do not already live there, should be a public expense.
Members travel a lot as part of their work, both within their electorates and around the country. This is the case for list members, as well as constituency members. List members customarily have bases in electorates as well as responsibilities for nationwide communities of interest. All members routinely attend evening and weekend meetings, and other events. They must be constantly available to constituents, the general public, and the media in a way not required of most other groups. The pressures on Ministers and the Prime Minister are especially demanding. As a consequence, members and Ministers have much less of the family life other New Zealanders take for granted, often over a long period of years. Some limited family-friendly measures designed to recognise that reality are accordingly included in this determination.
The Act gives the Authority responsibility for only some of the services required by members and Ministers. Travel services and office, communication, and other support for members remain the responsibility of the Speaker. Travel services for Ministers remain the responsibility of the Minister Responsible for Ministerial Services. Within the constraints of that framework, we have tried, for reasons of practicality, to bring some consistency between the services for members and Ministers. We have, for example, replaced a reimbursable accommodation payment for members with an annual accommodation payment, an arrangement that Ministers have had since 2009.
The determination aligns certain services for the Speaker, Deputy Speaker, and Leader of the Opposition with those for Ministers, and it aligns certain provisions for qualifying electoral candidates with those for members. These alignments reflect differentials in current arrangements.
Process we followed
The Authority has engaged extensively with members on this determination. As required by the Act, we have sought the advice of the Minister Responsible for Ministerial Services and the Speaker. We have had the benefit of the views of the cross-party Parliamentary Service Commission and a working group of members set up by the Commission to talk to us as well as discussions with individual members. We conducted a confidential and anonymous online survey in March 2014 to obtain the views of members.
As required by the Act, we provided members and Ministers with the opportunity to comment on the determination in draft form. We sent the draft determination to them on 24 June 2014 and asked for comments by 24 July 2014. Following comments received from members in writing, and in meetings with us, we finalised the determination in August 2014.
As part of our research we reviewed the accommodation and family member travel provisions available in jurisdictions with parliamentary systems and traditions similar to our own, particularly in the United Kingdom, Canada, and Australia. We looked also at the way in which the public sector, and some private sector bodies in New Zealand, address work-related expenses. We also sought the views of a number of others with an interest in this matter, including the Parliamentary Service and Ministerial Services, given their responsibilities for the administration of the services. We reviewed the many reports on the matter of allowances for members and Ministers that have been written in recent years.
As required by the Act, we consulted the Commissioner of Inland Revenue about the taxation consequences of the determination.
Accommodation payments in Wellington
There is no doubt, on the basis both of the Authority’s survey of members and our own independent assessment of Wellington accommodation, that the cap on members’ accommodation payment of $24,000 a year for furnished accommodation close to Parliament and a contribution to some utilities is inadequate. We think it appropriate for the payment, set in 2007, to be increased to $28,000, reflecting the movement in the New Zealand Consumers Price Index (CPI) since 2007 and changes in the cost of furnished rental accommodation in central Wellington, and in utilities.
For reasons of administrative efficiency, the Authority considers that the claim and reimbursement system currently applying to members for rented accommodation should be replaced by an annual payment, thereby replicating the approach currently applying to Ministers.
Because of the nature of their duties, Ministers and the Speaker typically spend more nights every week, and more weeks every year, working in Wellington than is the case for members. They are more likely to have their spouse or partner or family members stay with them for some of the time they are in Wellington. Because of the nature of their work they are likely to require more space and greater security than members. The accommodation allowance for Ministers’ Wellington residences was set at $37,500 a year in 2009. The Authority considers it appropriate to increase this to $41,000 a year, given the changes in the cost of furnished accommodation near Parliament and in utilities, as well as movement in the CPI, in the period since 2009.
A number of members have shared rented accommodation in recent times, some telling us that that was because it had become too expensive to rent alone. The Authority does not wish to bar members from sharing accommodation if they wish. Under this determination, members will, however, receive a smaller allowance if they share accommodation, to reflect the cost savings in such arrangements.
Some members and Ministers choose to use non-continuous (hotel or serviced apartment) accommodation while they are at work in Wellington. As is the case for rented accommodation, hotel accommodation needs to be close to Parliament. The maximum amounts available, currently $160 a night for members and $200 for Ministers, set in 2007, have been increased to $190 for members and $240 for Ministers, to reflect the increased costs of accommodation since the rates were last set. The daily rates are subject to an annual cap equal to the allowance that applies to rented accommodation.
The determination contains a new provision for the continuation of the accommodation payment for individuals ceasing to hold office during a parliamentary term. These individuals will continue to receive the accommodation payment until the end of the period of notice required under their lease, or for 3 months from the date they cease to hold office, whichever is sooner.
Accommodation payments outside Wellington
Ministers, and to a lesser extent members, are required to travel out of Wellington for business meetings and to attend conferences and other work-related events all around the country. Members and Ministers also regularly stay away from home within their electorates, some of which are very large, to attend to constituency business. As with accommodation in Wellington, the cost of staying away from their home base in these circumstances is a work-related expense, appropriately paid from public funds.
We have reviewed accommodation payments with a view to ensuring that members and Ministers, while travelling on parliamentary or ministerial business, are able to use accommodation that is conveniently situated in relation to the activity being undertaken; promotes the efficient use of time and resources; and provides utilities at the level required to undertake the job (eg, wi-fi, 24-hour room service if possible, and easy access to air transport). We think it is reasonable for breakfast to be included in the costs of that accommodation, because that is the common practice for others who travel away from home for work purposes.
The maximum rate for members was last set at $160 a night ($180 in Auckland) in 2000.
We have increased the rate for members to a maximum of $190 a night ($210 for Auckland and Christchurch, given the higher rate applying in those 2 cities). We have set an accommodation rate for Ministers of $260 a night ($290 a night in Auckland and Christchurch), reflecting their requirement for accommodation with space for meetings and facilities that allow them to undertake their normal ministerial work while travelling. These rates can be increased by up to $70 a night for members and by $90 for Ministers if accommodation cannot be obtained in certain specific circumstances, eg, because of a major sporting, cultural, or diplomatic event, or the unavailability of suitable accommodation with facilities appropriate for those with disabilities.
Travel services for family members of members and Ministers
The Act requires the Authority to determine travel services within New Zealand for members’ and Ministers’ families; a nil determination would be inconsistent with the Act.
As noted above, the Authority is of the view that it is appropriate that Parliament and the Executive display a family-friendly approach to members and Ministers. That is consistent with the approach taken in many New Zealand workplaces in the interests of recruiting, retaining, and engaging employees.
At present, the spouses or partners of members and Ministers are entitled to travel at public expense for any purpose, except private business purposes, and on any scheduled air, or non-urban bus, train, or ferry service, and similar arrangements apply to members’ children under 5 who are accompanied by the member or member’s spouse or partner. Children of members and Ministers aged 5 to 17 have 4 return trips a year between home base and Wellington to be with the member while the member is on parliamentary business. Use of these services is very uneven. Some members and Ministers, reflecting their family circumstances, make extensive use of these provisions; others do not use the provisions at all.
Our engagement with members, even those who do not use the services, left us in no doubt that they regard the ability to spend time with family, especially children, as a critical ingredient in maintaining a sense of normality in what are unusually demanding work circumstances. We accept the importance of the principle. We do not, however, consider that the current open-ended arrangements are appropriate.
We have accordingly limited the use of spouse and partner travel. First, the travel must be to accompany or join the member or Minister while he or she is on parliamentary or ministerial business. Secondly, we have introduced a cap on the number of trips. A member’s spouse or partner can have 20 single trips a year; a Minister’s spouse or partner 30 single trips a year. That difference reflects the larger number of official engagements undertaken by Ministers at which the presence of a spouse is likely to be required. The travel of the spouse or partner of the Prime Minister is not capped, given the significant number of official events at which the spouse or partner is expected to accompany the Prime Minister.
Similar changes have been made for the travel arrangements for children. The travel must be to accompany or join the member or Minister while he or she is on parliamentary business. The number of trips for children between the ages of 5 and 17 are unchanged, except that trips are expressed as single trips, rather than round trips, for reasons of administrative convenience. There is no limit on the number of trips for children under the age of 5. In the interests of facilitating the ability of members to spend time with family, we have included a new provision allowing members and Ministers to have their family members stay with them when the member or Minister is travelling on parliamentary or ministerial business, provided that the maximum daily rate for the member or Minister is not exceeded.
The travel services for family members of members and Ministers set out in this determination are similar to those in the United Kingdom, Canada, and Australia. Family members’ travel in those countries is similarly subject to a capped number of trips and linked to accompanying the member on parliamentary business. We note that our approach echoes that set out in the Report of the Fourth Triennial Parliamentary Appropriations Review (2010), chaired by former Speaker, the Hon Sir Douglas Kidd.
Travel services for former Prime Ministers
The Act requires the Authority to determine the entitlements, if any, to travel services within New Zealand of former Prime Ministers and their spouses or partners.
Since the mid-1970s, former Prime Ministers and their spouses have had access to certain travel services to support them in carrying out public duties on leaving office. Those services, and the annuity for Prime Ministers in office for at least 2 years, had their origin in the Royal Commissions on parliamentary salaries and allowances in 1964 and 1973. Those commissions noted that the office of Prime Minister inevitably attracts obligations of a social nature that do not disappear with retirement, and involve personal expense.
The Authority considers that there continues to be an expectation that former Prime Ministers and their spouses will play a part in public life as a result of the office they once held. In our view, it is accordingly fair both to the individuals concerned and to the taxpayer that costs directly related to that ongoing role are publicly met. We note in this context that the travel services and the annuity go some way to addressing the very modest salaries received by successive Prime Ministers.
Over the 40 or so years since these services were first provided in the mid-1970s, the detail of the arrangements (set out in letters from the Prime Minister of the day) has varied. In this determination, we have maintained broad consistency with past practice, but have specified some limitations on some of the services currently provided. Specifically, the determination links the provision of free scheduled air and other travel to the fulfilment of commitments related to the former Prime Minister’s role as Prime Minister (and, as the case may be, to commitments of the spouse or partner that arise from his or her former role) and VIP chauffeur-driven cars are not to be used for private business purposes or employment purposes. These limitations are already reflected to some extent in some of the individual letters to former Prime Ministers, or are observed in practice by former Prime Ministers.
The provision of a self-drive car remains unchanged. The case for this is finely balanced. Use of a car undoubtedly has a considerable personal benefit. On the other hand, a former Prime Minister is likely to have to travel to and from airports and around the country in the course of commitments arising from his or her former role. Use of a self-drive car is likely to be more cost effective than use of taxis or chauffeur-driven cars.
Under the Act, this determination applies only to former Prime Ministers in the future. The Act specifies that existing individual agreements on travel services for former Prime Ministers cannot be changed.
The Act states that if services provided to members and Ministers include an element of remuneration, or result in any other private benefit, the value of that benefit should be taken into account by the Authority in determining members’ and Ministers’ salaries. The Authority will do that in a salary determination to be made later in the year.
The determination specifies that members and Ministers are personally responsible for the use of the services set out in this determination, even when expenses are incurred on their behalf under delegated authority. They must satisfy themselves that the expenses under the determination represent value for money and are incurred having regard to efficiency and effectiveness. They are required to keep proper documentation and to certify that their expenditure complies with the determination. The Authority notes that the Act requires information to be published every quarter, showing every member’s and every Minister’s total expenses incurred in respect of the accommodation services and the travel services for family members set out in this determination.
Some services provided for in this determination are administered by the Parliamentary Service and other services by the Department of Internal Affairs. The Speaker and the Minister Responsible for Ministerial Services will agree on these administrative arrangements in accordance with section 7 of the Parliamentary Service Act 2000.
The Act requires the Authority to make a determination on accommodation services for members and Ministers, and travel services for their families, once in each term of Parliament. The Authority has developed the current determination with a view to its enduring throughout the term of the next Parliament. Barring unforeseen circumstances, the Authority does not propose to issue a new determination until late 2016. The arrangements set out in this determination will be thoroughly reviewed at that time.
Note: The preceding explanatory memorandum should be read in conjunction with the explanatory memorandum(s) appended to the: